U.S. stocks surged on Wednesday, with the S&P 500 and Dow industrials closing at records, after the Federal Reserve moved to cut stimulus, saying it expects the labor market will continue to improve and vowing to keep interest rates low.
"Investors are looking past the taper and looking at the strength of the economy that is perceived with this news," said Chris Gaffney, senior market strategist at EverBank. Read: Fed taper seen as good sign for the economy, bad omen for bonds.
"The Fed did a great job telegraphing it to the markets, as stocks are moving in the opposite direction than you'd think," he added of equities rallying on the news.
The Fed said it would start to taper its bond-buying program to $75 billion a month from $85 billion, an initial move to unwinding the stimulus that the central bank began to help the economy heal from the recession that came after the near meltdown of the country's financial system.
At a news conference, Fed Chairman Ben Bernanke said the central bank would likely make similar moderate steps at future meetings so long as the data support such moves.
Shares of Ford Motor fell sharply after the automotive company projected lower pretax profit in 2014. Lennar reported a 13 percent increase in quarterly orders, with its shares rallying along with those of other homebuilders. Shares of FexEx slid after the global shipper posted quarterly results that missed Wall Street estimates. AMC Entertainment rallied in the movie-theater operator's first day as a public company.